London pre-open: Stocks seen flat; services PMI in focus
London stocks looked set for a flat open on Wednesday following downbeat US and Asian sessions, as investors begin to turn their attention to this week’s Bank of England rate announcement.
The FTSE 100 was set to open unchanged from Tuesday’s close at 6,645.
On the data front, UK services PMI is at 0930 BST.
CMC Markets’ Michael Hewson said: “UK services PMI for July is expected to remain at the 47.4 levels seen between 12th and the 21st July, however given the stabilisation in the political climate seen since mid-July there is the outside possibility that these might improve.
“A further deterioration here would certainly raise the stakes further for tomorrows Bank of England rate decision, where expectations remain high that we’ll see a cut in rates for the first time in seven years.”
In the US, the ADP employment report is at 1315 BST, while Markit’s services PMI is at 1445 BST and ISM non-manufacturing is at 1500 BST.
The next big focus will be Thursday’s Bank of England rate announcement.
In corporate news, HSBC Holdings' profits fell by more than a quarter amid difficult conditions in the first half of the year that look unlikely to diminish soon, though the bank sweetened the pill with news of a $2.5bn (£1.8bn) share buyback thanks to the sale of its Brazilian business.
In the six months to 30 June, pre-tax profits of $9.71bn were down 28.7% from the same period last year earlier and short of the City's expectations of around $10bn.
Fashion retailer Next posted a trading update for the 26 weeks to 30 July on Wednesday, with full price sales in the second quarter up just 0.3% on a year ago.
The FTSE 100 firm said of that, Next Retail sales fell 3.3%, with Next Directory adding 5.7%, with new space adding 1.5% to brand sales during the quarter and the year to date.
Total sales, including markdown, were down 0.7% at Next Retail in the year to date and up 5.4% at Next Directory, for a total increase of 1.8%.
FTSE 250 temporary power provider Aggreko posted a drop in first-half profit and revenue as weak oil prices took their toll on the company.
For the six months to the end of June, pre-tax profit slid 31% to $61m on revenue of £685m, down 12% from the same period in 2015.
Chief executive officer Chris Weston said: “The trading environment in this first six months has been difficult, with the lower oil price continuing to impact a number of our markets. We are holding our guidance for the full year while recognising the importance of securing key contract extensions and the seasonal weighting of our North American business to the second half.”